Thursday, August 31, 2006

The California legislature has sent the Terminator (aka "the Guv") a bill that would provide a big spur to video competition in the Golden State. The bill, which last night passed the State Senate overwhelmingly, provides for statewide franchises for multichannel video providers. This allows telephone companies, like AT&T and Verizon in California, to get into the video business in competition with the cable and satellite television providers much more quickly than if they are required to obtain franchises on a locality-by-locality basis. Importantly, according to the LA Times story, the bill will allow the cable companies to opt into the statewide franchise system so they are treated the same for regulatory purposes as the telephone company competitors.

The LA Times story contains this statement: "AT&T Inc., California's dominant phone company, would be the biggest beneficiary of the legislation." It is true that AT&T is a "beneficiary" of this legislation in the sense that it will be able to enter a market that it wants to serve much more quickly than it otherwise could, and it won't be subjected to locality-by-locality rent-seeking hold-ups. It may even be a big beneficiary in that it will make money at the business, although there are no guarantees in the fast-changing communications marketplace. But the "biggest" beneficiaries are California's consumers. They will benefit from the lower prices and better service quality that additional competition brings.

There are a lot of ideas that originate in California that I pray never make it eastward over the Rockies, or even the Sierra Nevada. But, especially the way that Montgomery County, Maryland thus far has held up Verizon's bid to provide video service, the Maryland General Assembly might want to look westward for a model for jump-starting video competition. My earlier post, "Montgomery County Impedes Video Competition," is here.